EURJPY TECHS: Monitoring Support At The 50-Day EMA

• +23,647 wk2 TY 112 puts, 13 vs. 112-20.5 (exp 9/12)

Labor Market: This was the weakest Beige Book report in terms of employment dynamics in at least the last year, pointing to a loosening labor market. Factors included weaker demand and uncertainty, while regional employers cited automation via AI and reiterated a negative supply-side impact from reduced immigrant labor availability.

• The report notes "Eleven Districts described little or no net change in overall employment levels" - we see 7 as "unchanged" (New York, Philadelphia, Cleveland, Richmond, Atlanta, St Louis, Dallas), with 3 in "slight" decline (Boston, Minneapolis, San Francisco) and 1 with employment rising "slightly" (Chicago). The report also singles out "one District" which "described a modest decline" - that was Kansas City.
• The ongoing deteriorating of labor market conditions since the start of the year is evident in the table of recent Beige Book comments below.
• Further color: "Seven Districts noted that firms were hesitant to hire workers because of weaker demand or uncertainty. Moreover, contacts in two Districts reported an increase in layoffs, while contacts in multiple Districts reported reducing headcounts through attrition—encouraged, at times, by return-to-office policies and facilitated, at times, by greater automation, including new AI tools. In turn, most Districts mentioned an increase in the number of people looking for jobs. However, half of the Districts noted that contacts reported a reduction in the availability of immigrant labor, with New York, Richmond, St. Louis, and San Francisco highlighting its impact on the construction industry.
• On wages: "Half of the Districts described modest growth in wages, while most of the others reported moderate growth. Two Districts noted little or no change in wages."

The Fed's latest Beige Book pointed to a slightly improved assessment of current economic activity in August versus the prior edition in July, with selling price pressures remaining modestly/moderately to the upside. However, expectations were for future price increases (in part due to tariffs), and the latest edition suggests that labor market conditions have weakened. The table below summarizes the region-by-region findings.

• Economic Activity: Most regional banks reported little or no change in activity vs the July report, with four noting slight declines in activity (New York, Atlanta, Minneapolis, San Francisco), two unchanged (St Louis, Kansas City), two "slight" growth (Boston, Cleveland) and four "modest" expansion (Philadelphia, Richmond, Chicago, Dallas).
• This is actually slightly more upbeat than July's report in which just one (Richmond) Fed reported "modest" growth, with the majority (7) reporting unchanged activity.
• The national summary notes that "across Districts, contacts reported flat to declining consumer spending because, for many households, wages were failing to keep up with rising prices. Contacts frequently cited economic uncertainty and tariffs as negative factors."  
• While the reported sector-by-sector dynamics were mixed, the consumer demand story was largely downbeat, leading firms to cut prices, offer promotions, and/or adopt automation via AI.
• As for the outlook, "overall, sentiment was mixed among the Districts. Most firms either reported little to no change in optimism or expressed differing expectations about the direction of change from their contacts."